Merrion shares up 42% after diabetes drug deal

SHARES IN Irish drug development company Merrion Pharmaceuticals rose over 40 per cent yesterday after it announced a multimillion euro deal with Novo Nordisk to develop oral diabetes products.

Under the agreement Novo Nordisk will pay Merrion for the cost of its development work, provide €45.7 million ($58 million) in staged payments and provide the Dublin-based company with an undisclosed stake in the royalties on sales of any product brought to market from the collaboration.

Merrion shares closed at €3.00, a gain of 42.86 per cent from the previous close of €2.10.

Merrion develops technologies that allow injection-delivered drugs to be delivered and absorbed in oral form.

John Lynch, Merrion chief executive said oral insulin is "the Holy Grail of the drug delivery business" and that no other major pharmaceutical firm has a similar product in development.

He said Merrion's technology was particularly relevant for bio-pharmaceuticals because most were given by injection: "To give them in tablet form can really transform the use of the drug. It changes the economics of a drug."

Novo Nordisk is one of the largest suppliers of diabetes medicines and the collaboration with Merrion will focus on its new generation peptide and protein-based insulin drugs. The companies have been working together since 2007.

Mr Lynch said he was delighted with the collaboration, the biggest in the listed company's four-year history. "Novo Nordisk are the world's leader in this diabetes field . . . and they are very good at developing these new insulin products."

As a result of the deal Merrion is going to increase its full-time staff of 26 people by "around 25 per cent". Mr Lynch declined to comment on the likely development time but industry sources suggested such a project would require three to five years.

At €3 the company has a market capitalisation of €50 million. Even with today's share price rise the company's stock has lost 31 per cent this year. It floated on December 18th, 2007.